The total household income of crop farmers is 9 percent more volatile than that of livestock producers, say USDA economists in a report that drills into farm household income, which often includes off-farm employment. The report says farm income is more variable than income of non-farmers and that as farms get bigger, so does the degree of volatility of their income.
For example, a farm operator with assets of $1.5 million has income that is 23 percent more volatile than farmers with less than $750,000 in assets. Income is 41 percent more volatile on operations with assets of up to $3 million and 59 percent more volatile when assets exceed $3 million. The biggest correlation for income volatility — 63 percent — was being a farmer.
“Farm income is highly variable, with earnings subject to fluctuations in output and prices,” said USDA. “Total household income is more volatile on larger farms mainly because these farms derive a greater share of their total income from the farm.” In an article in the USDA publication Amber Waves, researchers said education and marriage were notable factors in reducing variability in income. “Compared with single farm operators, married couples operating a farm likely earn a larger share of household income from less volatile off-farm sources, which reduces total income variability.”
The article was based on the report, “Farm household income volatility: An analysis using panel data from a national survey,” which is available here.